When making an offer on a home, it is important to make sure you are making an educated offer. You know what the seller is asking, but you should never just offer that asking price. You must first fully understand what you would be buying, and whether or not that price was fair before making any real estate offer.
Never simply come up with an arbitrary price that you think you can afford to pay. Nor should you offer more than is being asked in order to make sure you get the property – these days are long gone! You should first take steps to establish the fair price of the property concerned, and then establish what to offer when buying a house that you may or may not genuinely purchase.
Here is some advice on establishing what to offer when buying a house, and coming to a real estate offer that reflects its value and what you are able to afford to pay.
Check Comparable Sales
The term ‘comparable sales’ is commonly used in the real estate business. It refers to the prices recently paid by buyers of homes properties of the same size and description in the same neighborhood. If there have been no recent sales of similar homes, then prices in other areas can be taken to establish comparable sales.
The sales used in comparison with the home you are thinking of buying should be similar in certain aspects. These include the square footage, number of rooms, en-suite bedrooms or number of toilets, attic space, garage size, and area of front and back yards. You should also take into account the condition of the internal décor, and any enhancements such a pool, ponds, fountains and patios.
It should be possible to compare your home with others in a particular area, particularly if they were built as part of a development. You can then compare the asking price of the property with the selling price of similar properties and come to a decision on what to offer when buying a house in that area.
Real Estate Offer and Your Finances
Before making a real estate offer, you should know what mortgage you are able to get. Unless this is never an issue with you, it is advisable to have your mortgage offer agreed in advance. You will then know what to offer when buying a house with the confidence that the mortgage will be available. You will not want to make an offer to buy a home and then have the mortgage application turned down.
If your credit score is good, meaning a FICO score of 680 or more, then all you need worry about is your debt to income ratio. A good level is 33/38. This means that your total monthly debt repayments are 38% of your income, and what you pay relating to home purchase is 33% of your income.
Mortgage debt will include your monthly mortgage repayment, homeowner’s insurance payments and any local homeowner association fees. Add to that anything else you pay now that you would not have paid had you not purchased your home.
Your Final Decision on What to Offer When Buying a House
You should make your final decision on your real estate offer based upon what you believe your prospective new home to be worth, how much similar homes have recently sold for and how much mortgage you can get. Stick to these three factors, and you should not go wrong. You should then be able to make the right decision on what to offer when buying a house. For more information, please contact Anthony DiLeo at (732) 264-2700 x 18, or email at [email protected]